Currently, deal flow remains significantly below the 2007 peak, but sizable transactions have been reported recently, and there has been a year-over-year improvement in transaction volume. In 2010, commercial real estate deal volume rose 124.3 percent year-over-year, to $122.7 billion, compared to $54.7 billion in 2009. Gains were higher for high-quality core assets, especially in the office segment, where sales volume rose 156.6 percent YoY to $41.1 billion in 2010, from $16.0 billion in 2009. The growth has continued so far in 2011, with CRE deal volume rising 69.5 percent YoY in 1Q11 to $30.5 billion. While this improvement is a positive development, it has yet to be sustained for a long enough to confirm 2009 as the bottom for transactions in this cycle. Transaction levels remain below peak, but private investors continue to account for the largest share of the total. The recent increase, however, has been driven by public investors (including REITs) and foreign investors, with both categories surpassing 2009 totals in 2010.
Commercial Real Estate and Economic Outlook
Commercial Real Estate and Economic Outlook LAWRENCE YUN REALTORS® Midyear Meetings Marriott Wardman Park Washington, DC May 17, 2012
-1600000 -1400000 -1200000 -1000000 -800000 -600000 -400000 400000 -200000 200000 0 2000 - Jan 2000 - Aug 2001 - Mar 2001 - Oct 2002 - May 2002 - Dec 2003 - Jul 2004 - Feb $ million; 12-month Total 2004 - Sep 2005 - Apr 2005 - Nov 2006 - Jun 2007 - Jan 2007 - Aug (Standard & Poor’s Downgrade) 2008 - Mar 2008 - Oct 2009 - May 2009 - Dec U.S. Federal Budget Deficit 2010 - Jul 2011 - Feb 2011 - Sep 2012 - Apr
Economic Forecast (GDP = C + I + G + ∆NX) 2011 2012 2013 History Forecast ForecastGDP Growth +1.8% +2.4% +3.1%Payroll Job +1.7 million +2.2 million +2.5 millionGainsFed Funds Rate 0.1% 0.1% 0.1%10-yr Treasury 2.8% 2.1% 2.5%
Risks to Economic ForecastFiscal Cliff on January 1, 2013 … if no newcompromised budget then … • Automatic deep cuts to military and domestic spending • Automatic higher taxes • 3% shaved off GDP growth, which is currently growing at 2%